At the start of World War II in 1939, the Portuguese Government announced on 1 September that the 550-year-old Anglo-Portuguese Alliance remained intact, but since the British did not seek Portuguese assistance, Portugal was free to remain neutral in the war and would do so. In an aide-mémoire of 5 September 1939, the British government confirmed the understanding. As Adolf Hitler's occupation swept across Europe, neutral Portugal became one of Europe's last escape routes. Portugal was able to maintain its neutrality until 1944, when a military agreement was signed to give the United States permission to establish a military base in Terceira Island in the Azores and thus its status changed to non-belligerent in favour of the Allies.

The Estado Novo was the corporatist Portuguese state installed in 1933. It evolved from the Ditadura Nacional formed after the coup d'état of 28 May 1926 against the unstable First Republic. Together, the Ditadura Nacional and the Estado Novo are recognised by historians as the Second Portuguese Republic. The Estado Novo, greatly inspired by conservative and autocratic ideologies, was developed by António de Oliveira Salazar, who was President of the Council of Ministers from 1932 until illness forced him out of office in 1968.